The most important thing you can do if you have suffered losses and have no idea whether you should have, is to consult with a securities arbitration lawyer like myself. I routinely review cases where I end up saying to the potential client,
“You have suffered financial losses, but you should not pursue a case.” I am also famous for saying, “Just because you have a financial loss does not mean that anyone did anything wrong.” Every case is comprised of both liability and damages/losses.
In other words, you cannot have one without the other in a securities arbitration case, or any other case, for that matter. The most disheartening cases that I evaluate are those where the wrongdoing is extremely clear and yet the investor
has not suffered any losses.
Some investors mistakenly think that they can recover their losses by complaining to FINRA. Although FINRA does have a protocol for receiving investor complaints, FINRA has no ability to recover your losses for you. Neither does filing a complaint with FINRA about your situation toll the running of the statute of limitations.
Some investors also mistakenly think that they can recover their losses by writing a complaint letter to the brokerage firm. This is very rarely productive and usually results in the investor abandoning their complaint, as the brokerage firm’s response letter invariably points the finger of blame on the investor. Too many people choose to write off their investment losses feeling naïve for trusting the wrong financial advisor. Years ago, I wrote a monthly article for the Colorado Springs Business Journal newspaper. One of my articles was entitled “The Just Say No Tactic” (see * below) and it explained how this is a very routine course of conduct for brokerage firms when receiving complaint letters. Brokerage firms have a strong motivation to simply deny complaints, because regulatory rules require that the brokerage firm report the complaint to the regulators. It looks better to the regulators when they see that the firm denied the complaint. I have had cases where my client wrote multiple complaint letters and never received a response from the firm at all. Therefore, do not think you can recover your losses by writing the brokerage firm a complaint letter.
Another avenue that investors have for recovering their losses is through a mediation. The difference between a mediation and then arbitration is that an arbitration is binding, whereas the parties have to agree in a mediation. Mediations typically do not take place without first instituting a securities arbitration claim. Mediations take place in person with the Claimant and her lawyer in one room and the Respondent and representative and their lawyers in another room. The mediator goes back and forth between the rooms trying to get the Respondents to offer more and the Claimant to accept less. There is a saying about settlements that neither person leaves happy, because each has made compromises they didn’t want to make. In my opinion, mediations are a good idea in only very rare circumstances. They are time-consuming, often unfruitful, and simply provide the brokerage firm with additional facts about the Claimant’s case. I am more likely to say to opposing counsel, and “Let’s save your client some money and settle this ourselves.”
The ultimate way to recover losses is, of course, through arbitrating the case. Only by arbitrating can you recover things like lost opportunity costs, attorney’s fees and pre-judgment interest, which the brokerage firms will never pay in a settlement.
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